Move to Take PrairieSky Public Is Part of Broader Restructuring as Natural-Gas Prices Fall

CALGARY—Canadian natural-gas producer Encana Corp. said Monday it has taken the first step toward an initial public offering of its oil and gas royalty business in Western Canada, which it previously pledged to spin off by mid-2014 as part of a broader restructuring.

Encana said it has filed a preliminary prospectus for the stand-alone entity and expects the share offering to close by early June. It will retain a majority stake in the...